Global Supply Chain Management Chapter

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following is NOT a commonly used export document?

  • Certificate of origin
  • Sales receipt (correct)
  • Bill of lading
  • Commercial invoice

Free Trade Zones (FTZs) are primarily used to increase customs duties.

False (B)

Name one example of a regional trade agreement.

United States-Mexico-Canada Agreement (USMCA)

Political restrictions on trade can include tariffs and ____________________.

<p>embargoes</p> Signup and view all the answers

Match the following trade agreements with their member countries or regions:

<p>USMCA = Canada, United States, Mexico EU = 27 member states ASEAN = 10 South East Asian countries Mercosur = Argentina, Brazil, Paraguay, Uruguay</p> Signup and view all the answers

Which Incoterm stands for 'Cost, Insurance and Freight'?

<p>CIF (B)</p> Signup and view all the answers

Absolute accuracy is crucial in domestic documentation more than in international documentation.

<p>False (B)</p> Signup and view all the answers

What are macroenvironmental influences?

<p>Uncontrollable forces and conditions facing an organization, including cultural, demographic, economic, natural, political, and technological factors.</p> Signup and view all the answers

The limitation on the amount of a product that may be imported from a country is known as an ___________.

<p>import quota</p> Signup and view all the answers

What is a common reason for implementing tariffs?

<p>To protect local businesses (A)</p> Signup and view all the answers

Which of the following is NOT an international market entry strategy?

<p>Product Diversification (C)</p> Signup and view all the answers

Exporting offers the highest risk among international market entry strategies.

<p>False (B)</p> Signup and view all the answers

What is the primary advantage of joint ventures in international market entry?

<p>Significant management input from the domestic firm.</p> Signup and view all the answers

The procurement of goods and services from foreign sources is known as _____

<p>importing</p> Signup and view all the answers

Match the advantage of licensing with its corresponding disadvantage:

<p>No capital outlay = Licensing agreements cannot be terminated quickly Reduced risk = Licensee can become a future competitor Increased flexibility = Risk of licensee bankruptcy</p> Signup and view all the answers

What percentage of the world population did the top ten countries represent in 2050?

<p>53% (B)</p> Signup and view all the answers

Licensing agreements can easily be terminated.

<p>False (B)</p> Signup and view all the answers

What is the main disadvantage of owning a foreign firm?

<p>Most risky of all international market entry strategies.</p> Signup and view all the answers

Achieving economies of scale can give a company an advantage in maintaining a _____ position.

<p>low-cost</p> Signup and view all the answers

Match the population year with the total population in thousands:

<p>2000 = 6,086,149 2010 = 6,872,671 2019 = 7,560,290 2050 = 9,488,153</p> Signup and view all the answers

What is a significant issue organizations may face when importing?

<p>Government regulations (C)</p> Signup and view all the answers

Nearshoring refers to locating suppliers far from the domestic company.

<p>False (B)</p> Signup and view all the answers

What is an advantage of exporting?

<p>Greater flexibility.</p> Signup and view all the answers

Ownership gives a firm the _____ degree of control over its supply chain strategies.

<p>highest</p> Signup and view all the answers

Match each market entry strategy with its correct description:

<p>Exporting = The most common method of international involvement Licensing = Allows use of proprietary assets in another country Joint ventures = Combination of firms to create a new entity Ownership = Financial control through acquisition or expansion</p> Signup and view all the answers

Why is absolute accuracy crucial in international documentation?

<p>To avoid additional costs and delays (A)</p> Signup and view all the answers

What is the main purpose of Free Trade Zones (FTZs)?

<p>To postpone or reduce customs duties (A)</p> Signup and view all the answers

Which term of shipment indicates that the seller covers both cost and insurance during transport?

<p>CIF (A)</p> Signup and view all the answers

What is an example of a non-tariff barrier in international trade?

<p>Import quotas (D)</p> Signup and view all the answers

Which of the following agreements includes Canada, the United States, and Mexico?

<p>USMCA (B)</p> Signup and view all the answers

Macroenvironmental influences on organizations include which of the following factors?

<p>Cultural factors (D)</p> Signup and view all the answers

How do regional trade agreements benefit supply managers?

<p>They simplify coordination with major trading partners (C)</p> Signup and view all the answers

What is a common impact of currency fluctuations on trade?

<p>Trade-offs between import and export volumes (A)</p> Signup and view all the answers

What is the function of an inspection certificate in international trade?

<p>To confirm product compliance with regulations (C)</p> Signup and view all the answers

Which of the following best describes an embargo?

<p>A comprehensive trade prohibition with another country (A)</p> Signup and view all the answers

What is the most common method of international market entry?

<p>Exporting (A)</p> Signup and view all the answers

What is a major disadvantage of licensing agreements?

<p>Cannot be terminated quickly (C)</p> Signup and view all the answers

Which of the following is an advantage of joint ventures?

<p>Significant management input from the domestic firm (A)</p> Signup and view all the answers

What is the primary risk associated with ownership as an international market entry strategy?

<p>Most risky of all strategies (C)</p> Signup and view all the answers

What does nearshoring refer to in the context of importing?

<p>Sourcing from foreign suppliers close to the domestic company (B)</p> Signup and view all the answers

What advantage does exporting provide for a company?

<p>Flexibility and less risk (B)</p> Signup and view all the answers

What is a commonly cited disadvantage of importing?

<p>Government regulations may complicate processes (B)</p> Signup and view all the answers

What is a common outcome of achieving economies of scale in international markets?

<p>Competitive advantage due to lower costs (B)</p> Signup and view all the answers

What does an agreement in licensing allow a firm to do?

<p>Use proprietary assets of another company (C)</p> Signup and view all the answers

What is a limitation of joint ventures?

<p>Knowledge of the international market is essential (C)</p> Signup and view all the answers

What can be a significant issue when exporting goods?

<p>Knowledge of regulations and compliance (B)</p> Signup and view all the answers

Which of the following best describes the advantage of ownership in market entry?

<p>Highest degree of control over strategies (A)</p> Signup and view all the answers

What might be a challenge when a company employs licensing as a strategy?

<p>Risk of licensee becoming a competitor (B)</p> Signup and view all the answers

What is one key factor that influences a company’s decision to enter international markets?

<p>Excess production capacity (B)</p> Signup and view all the answers

International documentation is simpler than domestic documentation.

<p>False (B)</p> Signup and view all the answers

Absolute accuracy in documentation is important to avoid additional costs or delays.

<p>True (A)</p> Signup and view all the answers

FTZs are areas that might increase customs duties on imported products.

<p>False (B)</p> Signup and view all the answers

The United States–Mexico–Canada Agreement (USMCA) involves three countries.

<p>True (A)</p> Signup and view all the answers

Political factors in international trade can include embargoes.

<p>True (A)</p> Signup and view all the answers

Currency fluctuations positively impact trade volumes at all times.

<p>False (B)</p> Signup and view all the answers

Incoterms are terms of shipment that help clarify responsibilities in international shipping.

<p>True (A)</p> Signup and view all the answers

The term 'CIF' stands for 'Cost, Import, and Freight.'

<p>False (B)</p> Signup and view all the answers

The macroenvironmental influences include factors such as cultural, economic, and technological aspects.

<p>True (A)</p> Signup and view all the answers

Underutilization is common among most Free Trade Zones.

<p>True (A)</p> Signup and view all the answers

Exporting is the least common method of international involvement.

<p>False (B)</p> Signup and view all the answers

Licensing agreements are easily terminated quickly.

<p>False (B)</p> Signup and view all the answers

A joint venture requires the combination of multiple firms to create a new entity.

<p>True (A)</p> Signup and view all the answers

Ownership as an international market entry strategy offers the lowest potential reward.

<p>False (B)</p> Signup and view all the answers

Nearshoring refers to locating suppliers and vendors far from the domestic company.

<p>False (B)</p> Signup and view all the answers

The advantages of exporting include greater flexibility and reduced risk.

<p>True (A)</p> Signup and view all the answers

A major disadvantage of licensing is the risk of the licensee becoming a future competitor.

<p>True (A)</p> Signup and view all the answers

Greater knowledge of the international market is required in joint ventures when the domestic firm is involved.

<p>True (A)</p> Signup and view all the answers

Importing involves the procurement of goods from domestic sources only.

<p>False (B)</p> Signup and view all the answers

The domestic firm has complete control over its marketing when using licensing as a market entry strategy.

<p>False (B)</p> Signup and view all the answers

Flexibility is higher in ownership as an international market entry strategy.

<p>False (B)</p> Signup and view all the answers

Economic barriers are significant issues organizations face when engaging in international importing.

<p>True (A)</p> Signup and view all the answers

A major advantage of ownership is its requirement for a high degree of control over supply chain strategies.

<p>True (A)</p> Signup and view all the answers

Competitive difficulties are an advantage of exporting.

<p>False (B)</p> Signup and view all the answers

Flashcards

Export Documentation

International export documents needed for trade; detailed and accurate to avoid delays or extra costs.

Incoterms

International commercial terms defining responsibilities and costs in international shipping.

Free Trade Zone (FTZ)

Area where import duties can be postponed or reduced, facilitating value-added activities and exports.

Regional Trade Agreements

Bilateral or multilateral agreements reducing trade barriers between certain countries.

Signup and view all the flashcards

USMCA

Trade agreement between the USA, Mexico, and Canada.

Signup and view all the flashcards

Political Restrictions

Government policies impacting international trade flows, e.g., tariffs, quotas, and embargoes.

Signup and view all the flashcards

Tariffs

Taxes on imported goods to protect domestic industries.

Signup and view all the flashcards

Import Quota

Limits on the quantity of a certain product imported from a specific country.

Signup and view all the flashcards

Macroenvironmental Influences

Uncontrollable forces impacting businesses, including cultural, demographic, economic, natural, political, and technological factors.

Signup and view all the flashcards

Currency Fluctuations

Changes in the value of currencies, affecting trade volumes between countries.

Signup and view all the flashcards

Global Supply Chain Management

Managing the flow of goods, services, and information across international borders.

Signup and view all the flashcards

Market Potential

The likelihood of a market successfully supporting a company's products or services.

Signup and view all the flashcards

Geographic Diversification

Spreading business operations across various geographical regions.

Signup and view all the flashcards

Exporting

Selling goods and services to customers in other countries.

Signup and view all the flashcards

Licensing

Granting permission to another company to use your products or technology in another country.

Signup and view all the flashcards

Joint Venture

A partnership between two or more companies to create a new entity in a foreign market.

Signup and view all the flashcards

Foreign Ownership

Taking financial control of a foreign company through acquisition or expansion.

Signup and view all the flashcards

International Market Entry Strategies

Methods companies use to enter international markets.

Signup and view all the flashcards

Importing

Procuring goods and services from foreign sources.

Signup and view all the flashcards

Global Sourcing

Procuring goods and services from various countries.

Signup and view all the flashcards

Advantages of Exporting

Flexibility, lower risk, experience gained, market testing.

Signup and view all the flashcards

Disadvantages of Exporting

Competitive challenges, currency fluctuations, regulatory knowledge needed.

Signup and view all the flashcards

Advantages of Licensing

Low investment, reduced risk, increased flexibility.

Signup and view all the flashcards

Disadvantages of Licensing

Limited control, potential for future competition, legal issues.

Signup and view all the flashcards

Advantages of Joint Ventures

Increased input, higher potential management input, and potential lower risks.

Signup and view all the flashcards

Disadvantages of Joint Ventures

Less flexibility, higher risks, significant international market knowledge required by the domestic firm.

Signup and view all the flashcards

Advantages of Ownership

High potential profit, high degree of control, minimize costs with existing acquisitions.

Signup and view all the flashcards

Disadvantages of Ownership

Highest risks, demanding market knowledge, potential government nationalization issues.

Signup and view all the flashcards

International Documentation

Detailed documents needed for international trade, crucial for accuracy and avoiding delays/costs.

Signup and view all the flashcards

Incoterms

International trade terms defining responsibilities for shipping costs and liabilities.

Signup and view all the flashcards

Free Trade Zones

Areas facilitating international trade by postponing or reducing import/export taxes.

Signup and view all the flashcards

Regional Trade Agreements

Agreements reducing trade barriers among countries, impacting supply chains.

Signup and view all the flashcards

Political Restrictions

Government rules impacting international trade, including tariffs, quotas, or bans.

Signup and view all the flashcards

Tariffs

Taxes on imported goods, protecting domestic industries.

Signup and view all the flashcards

Import Quota

Limits on the amount of goods a country can import over a set time period.

Signup and view all the flashcards

Macroenvironmental Influences

Uncontrollable factors like culture, economy, or politics that affect businesses.

Signup and view all the flashcards

Currency Fluctuation

Changes in currency values, impacting import/export costs.

Signup and view all the flashcards

Market Size

The total demand in a specific market; relevant when evaluating market potential.

Signup and view all the flashcards

Global Supply Chain Management

Managing the flow of goods, services, and information across international borders.

Signup and view all the flashcards

Market Potential

The likelihood of a market successfully supporting a company's products or services.

Signup and view all the flashcards

Geographic Diversification

Spreading business operations across various geographical regions.

Signup and view all the flashcards

Exporting

Selling goods and services to customers in other countries.

Signup and view all the flashcards

Licensing

Granting permission to another company to use your products or technology in another country.

Signup and view all the flashcards

Joint Venture

A partnership between two or more companies to create a new entity in a foreign market.

Signup and view all the flashcards

Foreign Ownership

Taking financial control of a foreign company through acquisition or expansion.

Signup and view all the flashcards

International Market Entry Strategies

Methods companies use to enter international markets.

Signup and view all the flashcards

Importing

Procuring goods and services from foreign sources.

Signup and view all the flashcards

Global Sourcing

Procuring goods and services from various countries.

Signup and view all the flashcards

Advantages of Exporting

Flexibility, lower risk, experience gained, market testing.

Signup and view all the flashcards

Disadvantages of Exporting

Competitive challenges, currency fluctuations, regulatory knowledge needed.

Signup and view all the flashcards

Advantages of Licensing

Low investment, reduced risk, increased flexibility.

Signup and view all the flashcards

Disadvantages of Licensing

Limited control, potential for future competition, legal issues.

Signup and view all the flashcards

Advantages of Joint Ventures

Increased input, higher potential management input, and potential lower risks.

Signup and view all the flashcards

International Documentation

Detailed documents required for international trade, ensuring accuracy and avoiding delays/costs.

Signup and view all the flashcards

Incoterms

International commercial terms defining responsibilities and costs in international shipping.

Signup and view all the flashcards

Free Trade Zones

Areas promoting international trade by temporarily reducing or postponing import/export taxes

Signup and view all the flashcards

Regional Trade Agreements

Agreements reducing trade barriers between specific countries, affecting supply chains.

Signup and view all the flashcards

Political Restrictions

Government policies influencing international trade, including tariffs, quotas, or trade bans.

Signup and view all the flashcards

Tariffs

Taxes imposed on imported goods to protect domestic industries.

Signup and view all the flashcards

Import Quota

Limitations on the quantity of a specific product a country can import during a certain period.

Signup and view all the flashcards

Macroenvironmental Influences

Uncontrollable factors impacting businesses, including culture, economics, politics, or natural forces.

Signup and view all the flashcards

Currency Fluctuation

Changes in currency values, affecting international trade costs and volumes.

Signup and view all the flashcards

Market Size

Total demand for a product or service in a specific market; vital to market analysis.

Signup and view all the flashcards

Global Supply Chain Management

Managing the flow of goods, services, and information across international borders.

Signup and view all the flashcards

Market Potential

The likelihood of a market successfully supporting a company's products or services.

Signup and view all the flashcards

Geographic Diversification

Spreading business operations across various geographical regions.

Signup and view all the flashcards

Exporting

Selling goods and services to customers in other countries.

Signup and view all the flashcards

Licensing

Granting permission to another company to use your products or technology in another country.

Signup and view all the flashcards

Joint Venture

A partnership between two or more companies to create a new entity in a foreign market.

Signup and view all the flashcards

Foreign Ownership

Taking financial control of a foreign company through acquisition or expansion.

Signup and view all the flashcards

International Market Entry Strategies

Methods companies use to enter international markets.

Signup and view all the flashcards

Importing

Procuring goods and services from foreign sources.

Signup and view all the flashcards

Global Sourcing

Procuring goods and services from various countries.

Signup and view all the flashcards

Advantages of Exporting

Flexibility, lower risk, experience gained, market testing.

Signup and view all the flashcards

Disadvantages of Exporting

Competitive challenges, currency fluctuations, regulatory knowledge needed.

Signup and view all the flashcards

Importing/Global Sourcing

Involves the procurement of goods and services from foreign sources. Organizations of all sizes and types can be involved in importing; government regulations can be significant issues.

Signup and view all the flashcards

Study Notes

Supply Chain Management

  • Global Supply Chain Management is a chapter topic.
  • Amelia Abernathy is the presenter/author.

World Economic Forum

  • A link is provided to a particular agenda.

Top 20 Retailers by Revenue in 2024

  • Walmart has a revenue of $628.6B.
  • Amazon has a revenue of $355.1B.
  • Schwarz has the highest international revenue with $119.9 billion.
  • Ikea has the highest share of international revenue (97%).
  • Tesco has the most locations globally with over 40,000 stores.

Factors Influencing a Company's Decision to Enter International Markets

  • Market potential
  • Geographic diversification
  • Excess production capacity
  • Advantage of low-cost position due to economies of scale
  • Products near the end of their lifecycle in the domestic market
  • Source of new products and ideas
  • Foreign competition in the domestic market

Population = Labor

  • 2000 Population: 3,598,744 thousand people (in thousands).
  • 2010 Population: 4,011,898 thousand people (in thousands).
  • 2019 Population: 4,358,102 thousand people (in thousands).
  • 2050 Expected Population: 5,070,409 thousand people (in thousands).
  • Top 10 Countries make up 59% of the world population in 2000.
  • The total world population in 2000 is approximately 6,086,149 thousand people.
  • The total world population in 2020 is approximately 6,872,671 thousand people.
  • The total world population in 2019 is approximately 7,560,290 thousand people.

International Market Entry Strategies

  • Exporting (most common).
  • Licensing (agreement between firms).
  • Joint Ventures (combination of firms).
  • Ownership (financial control).

Advantages and Disadvantages of Exporting

  • Advantages:*

  • Greater flexibility

  • Less risk

  • Gain experience

  • Test a market for its viability

  • Product is produced in the domestic market

  • Disadvantages:*

  • Competitive difficulties

  • Currency exchange rates

  • Domestic firm has little control over marketing mix in foreign market

  • Knowledge of regulations required

  • Compliance issues

US Major Exports

  • Aircraft are a top export in 14 states (28%).
  • Aerospace & Defense exports to Germany, France, Canada, the UK, and Japan alone amounted to $36.1 billion (Aerospace Industries Association).

Advantages and Disadvantages of Licensing

  • Advantages:*

  • Does not require capital outlays.

  • Risk levels are reduced.

  • Increased flexibility.

  • Good option when foreign markets have high tariff barriers or import quotas.

  • Disadvantages:*

  • Licensing agreements cannot be terminated quickly.

  • Licensee can become a future competitor.

  • Risk of licensee bankruptcy or acquisition by another company.

Advantages and Disadvantages of Joint Ventures

  • Advantages:*

  • Domestic firm provides significant management input.

  • Good strategy for wholly-owned subsidiaries when foreign gov't prohibits.

  • Disadvantages:*

  • Risks are higher.

  • Flexibility is lower.

  • Greater knowledge of the international market is required.

Advantages and Disadvantages of Ownership

  • Advantages:*

  • Highest potential reward.

  • High degree of control of supply chain strategies and tactics.

  • Minimizes start-up costs when acquiring existing companies.

  • Company can compete more effectively on price.

  • Disadvantages:*

  • Most risky market entry strategy.

  • Requires greater knowledge of international marketing.

  • Company is fully responsible for all marketing & supply chain activities and processes.

  • Potential for government nationalization of industry.

Importing and Global Sourcing

  • Procurement of goods/services from foreign sources.
  • Significant government regulations & locating suppliers close to company (nearshoring).

US Major Imports

  • Petroleum leads as the most valuable import (24%).

Over 50% of 2023 US trade involved:

  • Mexico
  • Canada
  • China
  • Germany
  • Japan.

US Imports vs. Exports

  • The US Imported more than exported to 15 of the top 20 trade partners.

America's Trading Partners

  • Import data.
  • Export data.
  • Trade balance data (US deficit).
  • Data comparison based on 2021 and 2022.

Documentation

  • International documentation is complex.
  • Absolute accuracy is critical to avoid costs and delays.
  • Useful documents for international trade include certificates of origin, commercial invoices and more.

Incoterms

  • Standardizes rules of global trade procedures.

Terms of trade

  • International trade shipping terms.

Free Trade Zones

  • Areas where companies can postpone or reduce customs duties.
  • Usually located at ports.
  • Levels of development vary.

Regional Trade Agreements

  • Efforts to reduce barriers, global trade agreements.
  • Implications for supply management in trading countries.

Examples of Regional Trade Agreements

  • USMCA
  • EU
  • ASEAN
  • Mercosur
  • China's Trade Agreements

Macroenvironmental Influences

  • Uncontrollable forces like: cultural, demographic, economic, natural, political, and technological factors.

Political Factors

  • Tariffs (to protect domestic business).
  • Nontariff barriers (restrictions other than tariffs).
  • Import quotas (limiting the amount).
  • Embargoes (prohibiting trade).

Political Factors (Examples)

  • Brexit (Britain's withdrawal from EU).

Economic Factors

  • Currency fluctuations (impact on trade).
  • Tradeoff of import/export volumes.
  • Market Size.
  • GDP per capita.
  • Infrastructure (e.g., airport runways).
  • Labor-intensive management (labor costs).

Culture Factors

  • Language (use of symbols & writing styles).
  • National holidays & observing them.
  • Time orientation (time perception and culture).
  • Business practices.
  • Cultural norms

A Package Marked for Export

  • Information on the package (handling marks, cautionary marks, consignee's mark, destination etc).

Bribery and Global Commerce

  • Data on countries and bribery rates.

Questions?

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

More Like This

Use Quizgecko on...
Browser
Browser